My family has a trust fund. My daughter, since the day she was born, has received dividends. The average is about $8,000 per year. She is 10 years old. In order to be fiscally responsible, we have set up an account with Edward Jones. Her money is being directly sent there to put in an account. So far it is worth over $100,000. I think we are being pretty fiscally responsible.

Should we use any of her money for her extra-curricular activity? For example, summer camps (which can range from $200 a week to $2,000)? Dance class? Gymnastics? We have not done this. We are not rich people. In fact, we are decidedly middle class. And I don’t want her to miss out on things that I feel will benefit her as a person overall.

As background, I grew up with the same trust amounts and, when I reached about 24, I was finally given control of my money and I only had $20,000. I am sure that my dad spent my money on my upkeep, possibly even made me pay for my own boarding school. We really cannot afford for to pay for “culturally” enriching stuff.

I would like her to go to private school, but we can’t afford that either. But she could. I am really torn.

Poor Parent with Rich Daughter

Dear Poor Parent,

I commend you making plans while your daughter is 10 years old. And, yes, it is tempting to give your daughter all the advantages in life that you never had.

That $8,000 per year seems like an endless well of ballet or gymnastic classes, or summer camps with other young girls born of wealthy parents with double-barreled names. Who knows? She could be the next Misty Copeland or Simone Biles. You can pay for these things and hope that all of these extra-curricular activities instill in her the expectation and confidence that, perhaps, you didn’t have at that age. It’s a luxury to take things for granted, especially when you are young.

That $8,000 per year seems like an endless well of ballet or gymnastic classes, or summer camps with other young girls born of wealthy parents with double-barreled names.

The good news is you don’t need private tutoring to give her that. It could help, of course, but it may also backfire and present challenges for your daughter to be dropped into a pool of monied peers who talk to each other (loudly) about their own families’ extravagant summer vacations and their parent’s latest model Tesla
TSLA, -3.27%
There are so many other ways you can allow her to dream without dipping into this $100,000 honey pot for $2,000 here and $2,000 there.

This mother has a similar dilemma to you. She wants to give her daughter every advantage too, but her family had experienced generations of poverty. She has nothing. In some ways, instilling opportunity and ambition and wonderment in a child costs the price of a library card, and your time. This woman reached out to Reddit, and users on that site told her to visit a library at least once a week, go places that don’t cost money, read together as a family and often.

So what do you do with the money your child has inherited? You could invest a portion of it for eight years, until she graduates from high school. It might help her to have her trust fund then. Even then, of course, she could choose a public college in her own state and take out minimal student loans. When the blossoms come out every spring and she is studying for her college exams, she will be reassured by the nest egg that is growing every year.

You could invest a portion of it for eight years, until she graduates from high school. It might help her to have her trust fund at that point in her life.

The Moneyist Facebook Group (link below) had a lot to say. What struck me was how many people agreed with each other on the broader message, even if they differed on the details: Invest the money, they said, don’t fritter it away on private education now, especially if you can send your daughter to a good public school. Seek the help of a financial adviser. Don’t make risky investments. Save it for college. Allow her to make her own decisions when she turns 18.

I want to share another cautionary tale with you. This one involves a daughter who grew up with everything. Her name is Frances Stroh, and she was heir to the Stroh beer fortune in Detroit. At one point her family’s company was valued at close to $1 billion. They lost it all. She was left with $200,000 in stock. She never touched that $200,000 and used it to invest in technology stocks and real estate. She worked part-time and is now a landlord in San Francisco with several properties.

It wasn’t the riskiest or the most exciting thing to do with her lump sum, especially given her family’s history with reckless investments and more than a dash of bad luck, but it was the smartest. “I collect rent from some apartments I own in the city,” she told me. “That allows me to be an author and focus much of my attention on writing. It’s been a journey learning about finance and real estate and being independent. I had to figure it out on my own.”

You owe your daughter the same privilege. Give her the opportunity to make these decisions for herself when she is old enough, with your help.

Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).

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Hello there, MarketWatchers. Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas: inheritance, wills, divorce, tipping, gifting. I often talk to lawyers, accountants, financial advisers and other experts, in addition to offering my own thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in these columns — to this group. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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